The stock market has seen a lot of distractions lately, with Greek riots being the biggest “hit” on TV last week. Since the Greek crisis has been “solved” for now, I expect TV producers will turn their attention to the United States, where we may see protests against cuts in various state and federal programs, made necessary by the fast-approaching deficit ceiling. Amid all this drama, it is important to remember that stocks will be more influenced by upcoming quarterly earnings reports than by placard-carrying protestors. Greek-Style Riots May Come to America This Summer
In Greece, the street protestors failed to oust Prime Minister George Papandreou, who survived a pivotal confidence vote in Parliament on Wednesday, 155 to 143. But the cost was steep: In order to fund high (up to 30%) interest payments, some of Greece’s “crown jewels” will go on sale — including the postal bank, the national railway, the national lottery, Greek Telecom, major ports and other prime real estate.
On Thursday, a team of European Union (EU) and International Monetary Fund (IMF) inspectors reached a deal to provide 12 billion euros ($17 billion) in aid to Greece in exchange for even more budget cuts, plus a broadening of the income tax threshold for people that make as little as 8,000 euros ($11,400). These painful cuts and tax increases are expected to be approved by the Greek Parliament early this week. Read